In every area of banking there are departments in operation 365 days a year every year except one. This is the real estate workout department. Like a groundhog, the workout department has limited exposure. We can look at a calendar and see that February 2 is ground hog day - the day we see the groundhog when he comes out of his burrow and his shadow determines how much winter is remaining. But the workout department is not as predictable or regular. In most banks the Workout Department Doesn't exist today. This "reactive" department is much like the government that creates departments after an incident occurs. Industry was dumping toxic chemicals into the land and water.

It was a cheap disposal process that everyone knew about for decades. Then when the normal amount of people dying from chemical toxicity exceeded that normal, the government created the Environmental Protection Agency and passed laws to protect the environment. (Exception: Teddy Roosevelt created national parks to protect the environment 70 years before the EPA. What made TR so smart? I think he had two good eyes and used them.) During the 1960's when a number of passenger jets were hijacked to Cuba, metal detectors came into place. Internationally passenger planes were blown up and innocent people died. Only after until September 11, 2001 was Homeland Security created. In banking, the workout department is formed after an economic incident.

When a bank is in the lending business all loans are not created equal, meaning some situations show signs of stress and require attention early and often. When any economic blip takes place, the theme becomes "What Do We Do Now?" It is a reactive area of banking. Loan originators are hired to figure out what to do in situations they know nothing about. A dermatologist would not be consulted to do open heart surgery. Why then would the higher ups think a person not trained in the specialty of workouts could be successful in his job? Training personnel is critical to the success of any job. When an economic withdrawal presents itself, leadership in banking begins to try to figure out then and only then what to do with borrowers and customers who have real life challenges based on economic challenges. Sending in an inexperienced person or group of people is not a good strategy for the shareholders. Loan problems exist in good times but they are easily swept under the rug and not addressed as a main focus as they are when overwhelming volume takes place.

But they do mount up and become overwhelming. The purpose of this book to be a guide to making good decisions for all parties involved - you included.